Pioneer arbitration results in Monsanto lawsuit

An arbitration panel last week ruled in favor of Pioneer Hi-Bred, a DuPont business, against Monsanto Company in saying there was no contract breach of Pioneer’s Roundup Ready corn and soybean licenses with Monsanto because of Pioneer’s PROaccess seed companies genetics distribution relationship. Quickly after the arbitration ruling in favor of Pioneer, Monsanto filed a federal lawsuit against six of the Pioneer PROaccess seed companies claiming breach of their separate contracts with Monsanto for failing to pay royalties for past use of Roundup Ready soybean and corn technologies, prior to the seed companies being acquired by Pioneer.

The arbitration ruling said Pioneer didn’t breach its licenses contract with Monsanto, but Monsanto then decided to file suit against seed companies that Pioneer has acquired. Monsanto contends the suit “relates to past actions by these seed companies.”

Monsanto posted its explanation on its Web site. “Monsanto licensed the use of Roundup Ready corn and soybean technologies to these six companies under agreed upon terms and conditions. The companies were authorized to produce seed containing the technologies for sale under their brands to their farmer customers. Subsequently, the companies joined Pioneer’s PROaccess network of distributors. Through that arrangement, the companies substituted seed that was produced by Pioneer Hi-Bred, which also licenses Monsanto technologies. These company then sold Pioneer Hi-Bred seed under their brand names, which breached the terms of their contracts with Monsanto, including failure to pay trait technology royalties.”

DuPont claimed after the original arbitration ruling that it would be “business as usual” for the Pioneer PROaccess business model that was begun in 2008 and currently includes seven U.S. seed companies and distribution relationships with two unaffiliated seed companies. PROaccess is described as “distribution through alternative routes to market.”

Since Monsanto’s lawsuit, a quote widely distributed, has a DuPont spokesman saying, “We are not surprised Monsanto is pursuing yet another legal route against Pioneer’s PROaccess business.”